Y10. Cost Benefit Analysis


A cost benefit analysis is a common method for analyzing business decisions, evaluating various policy options, and comparing alternative investments. FREEDM researchers understand that electric utilities are able to invest in new technologies only if they are cost effective.

This project assessed the value proposition of implementing the FREEDM design for an electric utility. The team created a comprehensive CBA tool and applied it to various scenarios and uncertainty conditions. It required input from industry partners, energy modeling experts, power system simulations, and utility engineers.

The Principal Investigator for this project is Dr. Mesut Baran.


The CBA tool is a comprehensive spreadsheet developed over three years. It uses equipment costs, circuit design, operations data, load information, and PV generation estimates to calculate a Net Present Value for each scenario.

As modeled, adding solid state transformers and distributed grid intelligence allow increased DER hosting capacity on feeders while also meeting voltage standards. Deployment of such a system increases overall system efficiency and allows for greater conservation voltage reduction than the current state of the art. Alternative technologies such as smart inverters and other grid edge devices were also compared to FREEDM deployment. In addition, the team evaluated four “DC Home” scenarios where DC is distributed to various degrees within a residential setting, and the team evaluated EV fast chargers both utility owned and customer owned deployed as part of FREEDM.

As with any modeling exercise, there is uncertainty in input values. A traditional sensitivity analysis varies key parameters to determine the variables that should be more carefully defined. Another method is to use probabilistic modeling. This method can determine the probability of achieving a favorable cost benefit ratio within X years or the conditional expectation of payback period given that the value of peak demand power will be at a given level. This methodology was applied to investigate how the number of fault isolation devices installed on a sample system impacted system reliability.


The team continued in Year 10 to refine the tool, update the inputs, and expand the scenarios. The results show that the FREEDM System is a cost effective investment under particular scenarios and will become broadly cost effective as SST manufacturing costs decline.


  1. Methodological Approach for Estimating the Benefits and Costs of Smart Grid Demonstration Projects, Electrical Power Research Institute (EPRI) (2010).
  2. L. Sun, J. Thomas, S. Singh, D. Li, M. Baran, D. Lubkeman, J. DeCarolis, A. Queiroz, L. White, S. Watts, “Cost-Benefit Assessment Challenges for a Smart Distribution System: A Case Study,” IEEE 2017 PESGM, Chicago, IL.  
  3. L. Sun, J. Thomas, D. Lubkeman, M. Baran, J. DeCarolis, “Cost Benefit Analysis of Technology Options for Enabling High PV Penetration,” accepted for IEEE 2018 PESGM, Portland, OR.
  4. L. Sun, D. Lubkeman, M. Baran, “Residential DC House Cost Benefit Analysis,” accepted for IEEE 2018 T&D conference, Denver, CO.
  5. G. T. Heydt, “The Probabilistic Evaluation of Net Present Value of Electric Power Distribution Systems Based on the Kaldor-Hicks Compensation Principle,” IEEE Trans on Power Systems, 2017.